- May 25, 2024
- Posted by: [email protected]
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According to a recent study by independent examiner Robert Cleary, Sam Bankman-Fried’s (SBF) FTX Group paid more than $25 million in hush money to seven whistleblowers before the cryptocurrency exchange collapsed in November 2022.
Cleary’s investigation uncovered these settlements while reviewing employee severance packages, highlighting that FTX failed to properly document employee complaints. The report showed that more than $25 million was paid out, mostly to five whistleblowers who alleged various misconducts within the FTX Group.
According to the report, FTX Group did not investigate the whistleblowers’ claims but instead opted to settle the complaints for significant sums. Attorney Daniel Friedberg handled most of these resolutions. One notable case involved a whistleblower, referred to as Whistleblower-4, who sent a letter to Bankman-Fried, Friedberg, and FTX’s head of engineering, Nishad Singh. The letter alleged that the exchange misled regulators and investors and lacked a proper corporate structure.
After the letter was sent, Friedberg reportedly told Whistleblower-4 that he should not have written it and should not have suggested that FTX Group might fail to meet investor expectations. Consequently, Whistleblower-4 accepted a $16 million settlement in September 2022, just two months before the exchange’s collapse.
Another whistleblower, an attorney for FTX’s sister company, Alameda Research, was allegedly terminated after raising concerns about regulatory and governance issues at Alameda and its handling of customer funds without a money transmitting license. Despite working at Alameda Research for less than three months, this attorney received a $2 million settlement.
A third whistleblower, who worked at FTX.US for only two months, was reportedly granted a $1.8 million settlement after raising concerns about market manipulation and insider trading.
The release of this report precedes the sentencing of former FTX executive Ryan Salame, who faces criminal charges related to his role at the crypto exchange. Salame is the first FTX executive, aside from Bankman-Fried, to be sentenced for his actions. Meanwhile, Bankman-Fried is currently serving a 25-year sentence for orchestrating a multi-billion dollar fraud and has been ordered to pay $11 billion in forfeiture. These whistleblower settlements underscore Bankman-Fried’s desperate efforts to conceal his criminal activities in the lead-up to FTX’s collapse.
